INCONSISTENT
MANILA, JANUARY 15,
2012 (TRIBUNE) The Philippines was lumped among the world's
mostly unfree countries in the 2012 Index of Economic Freedom, published
annually by The Wall Street Journal and The Heritage Foundation, receiving a
rank of 107 out of 179 countries on the list as it continues to rate poorly on
the rule of law category despite President Aquino's straight path mantra.
Aquino has anchored his presidency on an anti-corruption platform but the
conservative think tank Heritage Foundation said the efforts remain wanting.
"Despite some progress, government anti-corruption efforts have been too
inconsistent to eradicate bribery and graft effectively," Heritage said in the
report.
The report also noted that the country's rule of law remains uneven,
and the legal framework is deficient in independence and efficiency.
The Philippines was sandwiched between Swaziland, 106th, and Mozambique,
108th, in the ranking and defied and overall improvement of Asian countries in
the list.
Its neigh-bors Malaysia was ranked 53rd; and Thailand, 60th.
The report added the cumbersome court system and loose regard for contracts
continue to be causes for concern.
The Aquino administration has been severely criticized for dissolving
contracts from the past administration while stubbornly refusing to provide fair
compensation for the operators of the Ninoy Aquino International Airport (NAIA) that was expropriated by the government.
Heritage Foundation added the local judiciary is nominally independent but
susceptible to political interference.
The Philippines received an economic freedom score of 57.1, which was almost
the same as last year. The country's score was below both the world average of
59.5 and the regional average of 57.5.
The Philippines also ranked 19th out of 41 countries in the Asia-Pacific
region.
The report noted "lingering institutional challenges" that it said will
require deeper commitments to reform. "Despite some progress, corruption
continues to undermine prospects for long-term economic development," it said.
The inefficient judiciary, which remains susceptible to political
interference, does not provide effective protection for property rights or
strong and transparent enforcement of the law, it added.
Hong Kong was consistent for the past 18 years as the world's freest economy
in the annual list.
The report said overall, 27 of the 41 Asia-Pacific countries were classified
as "mostly unfree" or "repressed."
Three of the 11 lowest-ranked countries are in the region, including North
Korea, which ranks as the world's least-free economy, it said.
Rankings declined for China and Japan, the region's two largest economies.
China dropped because of state control of the economy; Japan because of
increased government spending, in part a response to the earthquake and tsunami
that afflicted the country.
Launched in 1995, the index evaluates countries in four broad areas of
economic freedom: rule of law; regulatory efficiency; limited government; and
open markets.
Based on its aggregate score, each of 179 countries was classified as "free"
(i.e. combined scores of 80 or higher); "mostly free" (70-79.9); "moderately
free" (60-69.9); "mostly unfree" (50-59.9); or "repressed" (under 50).
Hong Kong scored 89.9 on the scale of 100, highest worldwide. Singapore,
which has ranked second all 18 years, scored 87.5. Australia and New Zealand
ranked third and fourth, respectively, enabling the Asia-Pacific region to
account for the four highest-ranked countries.
The world average score of 59.5 was two-tenths of a point below the 2011
average and the second-lowest score recorded over the past 10 years. Among the
179 countries ranked, scores improved for 75 countries and declined for 90.
Others did not change.
Hong Kong's score improved following a recent government plan to rebate
excess revenue to citizens. However, Index editors expressed concern that recent
policy changes in Hong Kong, particularly implementation of a minimum wage, had
"moved Hong Kong modestly in the direction of a more bureaucratic and
politicized economy."
Rankings for economic freedom in some countries, including the United States,
declined following massive government spending initiatives. Other countries
improved their scores with efforts to broaden tax bases, lower rates and combat
inflation.
Asia Pacific, although home to the four highest-ranked countries, scored 57.5
as a region. Despite this improved score, Asia-Pacific finished fifth among the
six geographic groupings surveyed. The gain over 2011 was helped by Taiwan,
which scored higher in six of 10 categories of economic freedom measured,
finishing at 71.9 for 18th place, ahead of Macau.
Index results continued to demonstrate that when countries adopt policies
leading to high scores, they also enjoy prosperity, economic security and
success. In the United Nations' assessment of what it calls poverty intensity,
mostly free and moderately free countries have only a third the number of people
in this position as do mostly unfree and repressed countries.
The top one-fifth of countries in advancing economic freedom grew at an
average rate of 3.7 percent. The bottom fifth grew 2.1 percent.
FROM THE HERITAGE FOUNDATION WEB
SITE
The Philippines' economic freedom score is 57.1, making its economy the 107th
freest in the 2012 Index. Its score is 0.9 point higher than last year, with a
significant improvement in business freedom.
The Philippines ranks 19th out of 41 countries in the Asia–Pacific region,
and its overall score is slightly below the world and regional averages.
Despite the challenging global economic environment, the Philippine economy
has been on a steady path of economic expansion. The government has pursued a
series of legislative reforms to enhance the entrepreneurial environment and
develop a stronger private sector to generate broader-based job growth.
Overall progress has been gradual, but regulatory efficiency has been notably
enhanced. The economy has expanded at an average annual rate of close to 5
percent over the past five years.
There are lingering institutional challenges that will require deeper
commitment to reform. Despite some progress, corruption continues to undermine
prospects for long-term economic development.
The inefficient judiciary, which remains susceptible to political
interference, does not provide effective protection for property rights or
strong and transparent enforcement of the law.
Background
The Philippines' diverse population, which speaks more than 80 languages and
dialects, is spread over 7,000 islands in the Western Pacific Ocean. The country
returned to democracy in 1986 after two decades of autocratic rule. President
Benigno Aquino III took office in 2010 with a mandate to address pervasive
government corruption. Although the previous government's failure to do anything
substantial to liberalize the economy set back efforts to attract much-needed
foreign investment in basic industries and infrastructure, and also saw the
Philippines continue its long slide from being one of Asia's richest economies
to being one of its poorest, economic growth has accelerated. The economy relies
heavily on emigrants' remittances, which are equivalent to more than 10 percent
of GDP.
Rule of Law
The rule of law remains uneven, and the legal framework is deficient in
independence and efficiency. The cumbersome court system and loose regard for
contracts continue to be causes for concern. The judiciary is nominally
independent but susceptible to political interference. Despite some progress,
government anti-corruption efforts have been too inconsistent to eradicate
bribery and graft effectively.
Limited Government
The top income tax rate is 32 percent, and the top corporate tax rate is 30
percent. Other taxes include a value-added tax (VAT) and an environmental tax,
with the overall tax burden amounting to 12.8 percent of total domestic income.
Government spending is equivalent to 18.5 percent of GDP. The deficit has been
over 3 percent of GDP, and public debt has hovered at around 45 percent of total
domestic output.
Regulatory Efficiency
The business regulatory environment has improved considerably. Although
launching a business still takes more than the world averages of seven
procedures and 30 days, the overall process has become less costly. The time and
cost involved in dealing with licensing requirements have been notably reduced.
The labor market remains structurally rigid, but existing regulations are not
particularly burdensome. Inflation is modest.
Open Markets
The trade weighted average tariff rate is 4.8 percent, and layers of
non-tariff barriers further inhibit more dynamic gains in trade. Despite a
strong desire to attract longer-term foreign investment, systemic inefficiency
exacerbated by heavy bureaucracy discourages dynamic growth in investment. The
financial sector, which is gradually modernizing, remains relatively stable and
sound.
The Heritage Foundation is an American conservative think tank based in
Washington, D.C. Heritage's stated mission is to "formulate and promote
conservative public policies based on the principles of free enterprise, limited
government, individual freedom, traditional American values, and a strong
national defense".
TO VIEW ALL RANKINGS: http://heritage.org/Index/Ranking
Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
All
rights reserved
PHILIPPINE
HEADLINE NEWS ONLINE [PHNO] WEBSITE
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